Piccadilly Circus in London during storm Emma in March: the economy suffered in the late cold snap.
Photograph: RMV/Rex Shutterstock

It’s early February all over again inside the Bank of England. Not that governor Mark Carney and his colleagues in Threadneedle Street are missing out on the good weather: it’s just that they are all making speeches about how they are poised, should the economic climate be conducive, to raise interest rates.

Carney wrote to the chancellor, Philip Hammond, on 8 February to say it was “appropriate to set monetary policy so that inflation returns sustainably to its target”, after previously resisting the temptation to increase rates in times of high inflation to support jobs and growth.

With employment at record levels and the economy expanding, almost 10 years of low rates were coming to an end, the bankers said. It was a symphony of economic voices.

The City took their words to mean that 2018 would see three rate rises, adding 0.75 of a percentage point to borrowing costs. The central bank’s base rate, which dipped to just 0.25% in the aftermath of the referendum vote before returning to 0.5%, would reach 1.25% by December.

Then came the “beast from the east” and storm Emma, and the economy suffered a hiccup. The ever-jittery monetary policy committee (MPC) balked at the risk of deepening a weather-induced dip in performance. A much-heralded rate rise in May was scrapped.

His intervention means Sir Jon Cunliffe could be the only “dove” left on the nine-member MPC.

Ramsden is probably on firm ground when he looks forward and addresses the risks of, yet again, readying mortgage borrowers and businesses for the pain of a rate rise.

There is unlikely to be any bad weather to match the cold snap that hit in late February and March. Fears of a full-blown trade war, possibly following a row at the G7 summit this weekend, could be realised, but are not expected. For one thing, Donald Trump has Kim Jong-un in his sights and won’t want to be distracted.

Yet the MPC cannot be complacent. Brexit votes scheduled over the next few weeks could end in chaos, given that no parliamentary majority for any particular Brexit formula exists. A stalemate will send the pound plummeting and damage consumer confidence, leaving the Bank little option but to keep borrowing rates cheap.

Even if the government gets through the next month with its soft-Brexit plan intact, November is likely to provide another flashpoint with the EU and Tory backbenchers as plans for Britain’s departure are concluded, potentially undermining the economic argument for a second rate rise.

Then there are the underlying issues that mitigate against an increase. One was highlighted by the United Nations trade body, Unctad, last week in its annual report: it says that in 2017 Britain fell from 2nd place to 24th place, behind Sweden (population 9 million), in the rankings of countries that receive foreign direct investment.

It is difficult to see how the economy can cope with more than a tiny rise in borrowing costs when investment and productivity remain low. It’s clear that the patient is still weak, and that tough love from the Bank of England is unwarranted.

An artist’s impression of the proposed Wylfa power station development. Photograph: Horizon/PA

Nuclear power U-turn will be a costly mistake

‘But it’s a nationalisation, isn’t it?” That was the question even Conservative MPs asked when ministers confirmed they would plough public money into a new nuclear power station in Wales.

Business secretary Greg Clark rejected the charge, arguing that all energy projects have some form of state involvement. That’s true. But there is a world of difference in taking a stake in a Japanese firm’s project and putting the taxpayer on the hook, reversing years of government opposition to state ownership.

Still, for a moment, set aside the debate over whether it’s right that the government should be proposing to use more than £5bn to help Hitachi. There is a more fundamental problem with the project: it’s a rip-off. Even with a state stake, the project will be ridiculously costly for consumers and alternatives are much cheaper.

As one MP pointed out, offshore windfarms have won contracts for as little as £57.50/MWh. “That is the real cost benchmark that the government should use,” said the SNP’s Alan Brown. Solar and onshore windfarms would be even cheaper, but have had their subsidies scrapped. Storage, smarter grids and imports can help the UK manage renewables’ variable output.

Clark’s intervention shows the economics of new nuclear do not work. Why should consumers pay through the nose when there are lower-cost alternatives?

MPs in wonderland over banking interventions

Parliament’s select committees are all behaving a bit like Lewis Carroll’s Queen of Hearts. A problem arises and the solution is immediately obvious to them: “Off with their heads!”

The latest example is the Treasury select committee’s demand that TSB boss Paul Pester fall on his sword for the IT debacle that resulted in nearly 2 million customers being locked out of their online accounts and, worse, more than a thousand finding themselves the victim of fraudsters.

It follows the demand earlier this year from the work and pensions select committee for the head of pension regulator Lesley Titcomb, who was in the hot seat when Carillion went bust and was criticised for paying insufficient attention to the funding deficit in the firm’s occupational scheme.

Hogg quit and Titcomb is on her way out. Surely Pester must also succumb to parliament’s will? Except for one thing. He’s not a public official. He runs a private company and has the backing of his board.

Quite sensibly, TSB has taken the view that blaming a collective decision on one person fails to fit the punishment to the crime. Saying that a recovery from the IT debacle was well under way, the bank’s chairman said last week: “This progress has been achieved under the leadership of Paul Pester, who continues to have the full support of the TSB board.”

So Nicky Morgan, the Tory chair of the Treasury committee, and her colleagues have overplayed their hand. Critical they should be, but private companies are their own masters. As a consequence, the limits of Morgan’s power are obvious and private company bosses will quake a little less when called in the future to give evidence.